Social Policy in Ontario

Canada’s job market underperforming for years

Posted on October 31, 2014 in Debates

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TheStar.com – opinion/commentary – An economist at the TD bank devises an indicator that measures the real distress in Canada’s job market.
2014/10/30.   By: Carol Goar, Star Columnist

There is a strange discrepancy between the official unemployment rate and the joblessness Canadians experience. It has been there since the recession ended in 2009.

Job seekers can’t pinpoint what’s wrong. But they know Statistics Canada’s monthly labour force survey doesn’t tell the whole story. It’s worse out there than Ottawa’s number crunchers think.

Economists have tried to explain the gap between the unemployment rate (currently 6.8 per cent) and the signals Canadians are picking up. They point to the large pool of discouraged workers (people who have given up job-hunting and are no longer counted); people who have been looking for work for so long that they have fallen off the radar screen; people getting by with part-time jobs, short-term contracts and low-wage survival jobs. Some analysts have urged policy-makers to look beyond the headline-making jobless rate.

Now a senior economist at the Toronto Dominion Bank has gone a step farther. Randall Bartlett has created an index that takes into account all of the unpublished or under-reported data that StatsCan, the Bank of Canada and the U.S. Federal Reserve collect to measure the health of the job market. He calls his yardstick the Canadian Labour Market Indicator.

It confirms what Canadians have been saying. “The Canadian labour market is currently experiencing more weakness than is implied by headline unemployment rate alone and has been for nearly two years. Contributing to this weakness are elevated levels of labour underutilization (job seekers who don’t fit StatsCan’s criteria), involuntary part-time employment and long-term term employment.

“Going forward we plan to continue publishing the TD labour market indicator as needed to provide additional context around our market analysis,” Bartlett says.

That is welcome news to the bank’s clients, the economic journalists who receive TD publications and those who visit the website of the bank’s economics department. But it is information all Canadians need.

Statistics Canada, the federal finance department or the department of employment and social services should be providing it.

None of these agencies has made any move to do that. Instead the finance department incorporated unchecked job vacancy data from Kijiji into its economic outlook, leading policy-makers to believe a severe skill shortage existed. The government budgeted $300 million to solve the problem, which turned out to be a statistical mirage.

The employment department launched an “examination” to find out whether Canadians receiving jobless benefits were actively searching for work. Federal officials showed up unannounced at people’s homes, hand-delivering a request to appear at an employment insurance (EI) interview.

Statistics Canada, constrained by successive budget cuts, kept churning out employment figures Canadians didn’t believe.

If Ottawa can’t come up with a credible gauge of the performance of Canada’s labour market, it should at least adopt Bartlett’s indicator (with the bank’s consent). All of his data are from public sources. He explains his methodology clearly. He is a bright young economist — a BA in mathematics, MA in economics and professional credentials as a certified financial analyst — with experience in the federal finance department and the office of the Parliamentary Budget Officer.

What stands in the way is politics. It serves the interests of the Conservative government to keep using an employment barometer that shows no real problem in the labour market. It allows cabinet ministers to claim job-seekers just aren’t trying hard enough to find work; they’re not properly trained; they’re not sufficiently mobile; or they’d rather collect EI than earn a living. It makes the recovery look stronger than it is, enabling the Tories to campaign for re-election on their record of creating jobs and improving voters’ lives.

But sooner or later — preferably sooner — the nation will have to admit the truth. The nature of work has changed profoundly in the post-industrial era. Contract work has replaced permanent employment. Jobs are short-term, part-time and sometimes precarious. Wages don’t always provide enough income to live on. Some parents need two — even three — jobs to make ends meet. Ottawa is not measuring — let alone coming to grips — with any of this.

It will take hard work and co-operation among governments, employers, educators and workers to reconnect talent and opportunity in a globalized, digital, rapidly changing economy. The process starts with up-to-date tools.

< http://www.thestar.com/opinion/commentary/2014/10/30/canadas_job_market_underperforming_for_years_goar.html >

Tags: economy, featured, ideology, participation, standard of living, youth

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